36 + Mcqs in Investment Management Page 1 McqOptions

1.	The negotiable financial investment is different from the non negotiable financial investment in terms of
A.	maturity period
B.	interest rate
C.	transferability
D.	face value
Answer» D. face value

Discussion

2.	Most of such stocks pay dividends and hence investors would like to buy and hold for long periods. Such a portfolio is called;
A.	patient portfolio
B.	aggressive portfolio
C.	efficient portfolio
D.	none of the above
Answer» B. aggressive portfolio

Discussion

3.	This pattern occurs when a stock price drops to a similar price level twice within a few weeks or months.
A.	support level
B.	cup ad handle
C.	double bottom
D.	none of the above
Answer» D. none of the above

Discussion

4.	These funds are stocks funds that invest in stocks with the potential for long term capital appreciation
A.	open ended fund
B.	closed ended fund
C.	growth fund
D.	income fund
Answer» D. income fund

Discussion

5.	Markets are inefficient when prices of securities assimilate and reflect information about them.
A.	True
B.	False
C.	none
D.	all
Answer» B. False

Discussion

6.	______________ contract is a one to one bipartite contract, which is to be performed in future at the terms decided today.
A.	forward contract
B.	future contract
C.	options
D.	none of the above
Answer» B. future contract

Discussion

7.	This is a document which either creates a debt or acknowledges it. These are short-term securities issued by the RBI on behalf of the Government of India.
A.	trade bills
B.	debentures
C.	treasury bill
D.	none of the above
Answer» D. none of the above

Discussion

8.	In the stock-price beta estimation for the Coca-Cola Company, the dependent variable is the:
A.	Return on Coca-Cola.
B.	Price of Coca-Cola stock.
C.	Return on the S&P 500.
D.	Value of the S&P 500 Index.
Answer» E.

Discussion

9.	These shares have a preferential right to the payment of dividend and to the return of capital at the time of winding up of the company.
A.	equity share
B.	preference share
C.	bonus share
D.	none of the above
Answer» C. bonus share

Discussion

10.	The variability in a security s return resulting from changes in the level of interest rates is referred to as;
A.	market risk
B.	interest rate risk
C.	purchasing power risk
D.	regulation risk
Answer» C. purchasing power risk

Discussion

11.	This option gives the holder or buyer , the right to buy specified quantity of the underlying asset at a specified price on or before a specified time.
A.	call option
B.	put option
C.	main option
D.	none of the above
Answer» B. put option

Discussion

12.	this option give the holder or buyer, the right to buy specified quantity of the underlying asset at a specified price on or before a specified time..
A.	call option
B.	put option
C.	main option
D.	none of the above
Answer» B. put option

Discussion

13.	This option gives the holder or buyer, the right to sell specified quantity of the underlying asset at a specified price on or before a specified time.
A.	call option
B.	put option
C.	main option
D.	none of the above
Answer» C. main option

Discussion

14.	This option gives the holder or buyer, the right to sell specified quantity of the underlying asset at a specified price on or before a specified time.
A.	call option
B.	put option
C.	main option
D.	none of the above
Answer» C. main option

Discussion

15.	______________ option give the holder or buyer, the right to buy specified quantity of the underlying asset at a specified price on or before a specified time
A.	call option
B.	put option
C.	main option
D.	none of the above
Answer» B. put option

Discussion

16.	___________ option gives the holder or buyer, the right to sell specified quantity of the underlying asset at a specified price on or before a specified time
A.	call option
B.	put option
C.	main option
D.	none of the above
Answer» C. main option

Discussion

17.	Which of the following terms represents an upper price limit for a stock, based on the quantity of willing sellers?
A.	Support.
B.	Trendline.
C.	Channel.
D.	Resistance.
Answer» E.

Discussion

18.	The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle?.
A.	Start-up phase
B.	Consolidation
C.	Maturity
D.	Relative decline
Answer» B. Consolidation

Discussion

19.	Labour strike, consumer preferences and management policies are making to arises out of uncertainty is known as ____________
A.	Financial Risk
B.	Business Risk
C.	Unsystematic Risk
D.	Systematic Risk
Answer» D. Systematic Risk

Discussion

20.	A ________ provides an account of the total revenue generated by a firm during a period (usually a financial year, or a quarter)
A.	Accounting analysis statement
B.	financial re-engineering statement
C.	promotional expenses statement
D.	profit& loss statement
Answer» E.

Discussion

21.	The accounting measure of a firm's equity value generated by applying accounting principles to asset and liability acquisitions is called ________.
A.	Book Value
B.	Market value
C.	Liquidation Value
D.	Tobins q
Answer» B. Market value

Discussion

22.	The predetermined price at which an underlying assets has to be bought or sold in an option contract is called
A.	option price
B.	exercise price
C.	spot price
D.	future price
Answer» C. spot price

Discussion

23.	The primary objective of this instrument is to provide some degree of flexibility in the credit portfolio of banks
A.	treasury bills
B.	interbank participation certificate
C.	certificate of deposits
D.	all of the above
Answer» C. certificate of deposits

Discussion

24.	Fundamental analysis is a .method that uses financial &economic analysis to predict the movement of stock price.
A.	sale valuation method
B.	stock valuation method
C.	purchase valuation method
D.	all of the above
Answer» C. purchase valuation method

Discussion

25.	Each contract is custom designed, and hence is unique in terms of contract size, expiration date and the asset type and quality.
A.	forward contract
B.	future contract
C.	options
D.	none of the above
Answer» B. future contract

Discussion

26.	Each contract is custom designed, and hence is unique in terms of contract size, expiration date and asset type and quality.
A.	forward contract
B.	future contract
C.	options
D.	none of the above
Answer» B. future contract

Discussion

27.	______________is a financial contract, between two or more parties, whose value is derived from the future value of an underlying asset.
A.	forward contract
B.	future contract
C.	options
D.	derivative contract
Answer» E.

Discussion

28.	__________ instruments are those instruments, which have a maturity period of less than one year
A.	money market
B.	capital market
C.	debt market
D.	none of these
Answer» B. capital market

Discussion

29.	This is the interest rate that every debenture /bond carries on its face value and is fixed at the time of issue
A.	current yield
B.	coupon rate
C.	market rate
D.	none of the above
Answer» C. market rate

Discussion

30.	Variance calculation and measuring the Standard deviation is one way of measuring the ______
A.	Risk
B.	Return
C.	Speculation
D.	Gambling
Answer» B. Return

Discussion

31.	_____________ use derivatives markets to reduce or eliminate the risk associated with price of an asset
A.	speculator
B.	arbitragers
C.	hedgers
D.	none of these
Answer» D. none of these

Discussion

32.	The variability in a security s returns resulting from fluctuations in the aggregate market is known as;
A.	market risk
B.	interest rate risk
C.	purchasing power risk
D.	regulation risk
Answer» B. interest rate risk

Discussion

33.	________ securities are generally issued for a fixed period and redeemable by the issuer at the end of that period.
A.	zero coupon bond
B.	debt
C.	equity shares
D.	none of the above
Answer» C. equity shares

Discussion

34.	You want to earn a return of 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant-growth DDM, the intrinsic value of stock A _________.
A.	will be higher than the intrinsic value of stock B
B.	will be the same as the intrinsic value of stock B
C.	will be less than the intrinsic value of stock B
D.	The answer cannot be determined from the information given.
Answer» B. will be the same as the intrinsic value of stock B

Discussion

35.	These funds are stock funds that invest in stocks with the potential for long term capital appreciation.
A.	open end fund
B.	closed end fund
C.	growth fund
D.	income fund
Answer» D. income fund

Discussion

36.	A stock has an intrinsic value of $15 and an actual stock price of $13.50. You know that this stock
A.	has a Tobin's q value < 1
B.	signals buy opportunity
C.	has an expected return less than its required return
D.	has a beta > 1
Answer» C. has an expected return less than its required return

Discussion

Explore topic-wise MCQs in Bachelor of Business Administration in Finance (BBA Finance).

The negotiable financial investment is different from the non negotiable financial investment in terms of

Most of such stocks pay dividends and hence investors would like to buy and hold for long periods. Such a portfolio is called;

This pattern occurs when a stock price drops to a similar price level twice within a few weeks or months.

These funds are stocks funds that invest in stocks with the potential for long term capital appreciation

Markets are inefficient when prices of securities assimilate and reflect information about them.

______________ contract is a one to one bipartite contract, which is to be performed in future at the terms decided today.

This is a document which either creates a debt or acknowledges it. These are short-term securities issued by the RBI on behalf of the Government of India.

In the stock-price beta estimation for the Coca-Cola Company, the dependent variable is the:

These shares have a preferential right to the payment of dividend and to the return of capital at the time of winding up of the company.

The variability in a security s return resulting from changes in the level of interest rates is referred to as;

This option gives the holder or buyer , the right to buy specified quantity of the underlying asset at a specified price on or before a specified time.

this option give the holder or buyer, the right to buy specified quantity of the underlying asset at a specified price on or before a specified time..

This option gives the holder or buyer, the right to sell specified quantity of the underlying asset at a specified price on or before a specified time.

This option gives the holder or buyer, the right to sell specified quantity of the underlying asset at a specified price on or before a specified time.

______________ option give the holder or buyer, the right to buy specified quantity of the underlying asset at a specified price on or before a specified time

___________ option gives the holder or buyer, the right to sell specified quantity of the underlying asset at a specified price on or before a specified time

Which of the following terms represents an upper price limit for a stock, based on the quantity of willing sellers?

The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle?.

Labour strike, consumer preferences and management policies are making to arises out of uncertainty is known as ____________

A ________ provides an account of the total revenue generated by a firm during a period (usually a financial year, or a quarter)

The accounting measure of a firm's equity value generated by applying accounting principles to asset and liability acquisitions is called ________.

The predetermined price at which an underlying assets has to be bought or sold in an option contract is called

The primary objective of this instrument is to provide some degree of flexibility in the credit portfolio of banks

Fundamental analysis is a .method that uses financial &economic analysis to predict the movement of stock price.

Each contract is custom designed, and hence is unique in terms of contract size, expiration date and the asset type and quality.

Each contract is custom designed, and hence is unique in terms of contract size, expiration date and asset type and quality.

______________is a financial contract, between two or more parties, whose value is derived from the future value of an underlying asset.

__________ instruments are those instruments, which have a maturity period of less than one year

This is the interest rate that every debenture /bond carries on its face value and is fixed at the time of issue

Variance calculation and measuring the Standard deviation is one way of measuring the ______

_____________ use derivatives markets to reduce or eliminate the risk associated with price of an asset

The variability in a security s returns resulting from fluctuations in the aggregate market is known as;

________ securities are generally issued for a fixed period and redeemable by the issuer at the end of that period.

You want to earn a return of 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant-growth DDM, the intrinsic value of stock A _________.

These funds are stock funds that invest in stocks with the potential for long term capital appreciation.

A stock has an intrinsic value of $15 and an actual stock price of $13.50. You know that this stock